Willscot Mobile Mini Holding (WSC: NSD) has announced plans to acquire McGrath RentCorp. The announcement has been met with positive investor sentiment, primarily driven by expectations of revenue growth acceleration and the creation of effective operational synergies.
Stock Target Advisor’s Take on Willscot:
Stock Target Advisor suggests a ‘Hold’ status for Willscot, with a target price of $52, hinting towards a potential price appreciation for the stock. Analyzing the recommendations of other professionals, the average analyst target price is $54.75, reflecting promising upside potential from the current stock price of $45.12. This implies a projected price change of 15.25% over the next year.
WSC’s return on assets underperforms, and its current price seems overvalued when compared to standard valuation metrics of book value, earnings, cash flow, and free cash flow. This level of valuation may raise concerns about the sustainability of its stock price.
04 analysts cover Willscot stock, all holding a consensus ‘Strong Buy’ rating. With their target prices ranging from $52 to $57, analysts indicated a bullish outlook for the stock. However, Stock Target Advisor’s slightly bearish rating adds complexity to the analyst consensus.
Willscot Mobile: An Analyzing the Financial Metrics
Over the trailing 12 months, Willscot has seen a capital depreciation of -5.74%, placing it relatively lower amongst its sector peers with a percentile ranking of 30.77%.
On a brighter note, WSC’s 5-year revenue and earnings growth stands at a staggering 380.47% and 329.88% respectively, outpacing most of its industry counterparts. However, high debt, demonstrated with a debt-equity ratio of 195.68%, adds an element of caution.
WSC’s third quarter performance in 2023 boasted revenue of $604.83M and net income of $91.52M, translating into a respectable profit margin of 15.13%. Impressively, WSC managed to record an EBIT margin of 29.45%.
Conclusion:
The impending acquisition of McGrath RentCorp by Willscot Mobile is expected to remarkably transform the company’s market presence. Buoyed by strong revenue and earnings growth, the company presents a promising outlook despite certain concerns like high valuation and increased beta.
